CUSTOMS MEMORANDUM ORDER NO.
4 – 2010
TO: The District Collector of Customs,
Subic Special Economic and Freeport Zone,
Clark Special Economic and Freeport Zone,
Port of Batangas
All Importers and Exporters, Bunkers, Sellers and Buyers of
Petroleum Products
All Others Concerned
SUBJECT: Implementation of the Regularization of the Fuel
Marking Program Pursuant to Department Order No. 43-
09 dated December 21, 2009.
Pursuant to Department Order No. (DO) 43-09 dated 21 December 2009, the
following instructions are hereby issued amending CMO 16-08, which is the implementing
regulations to the Fuel Marking Program under DO 23-07 as amended by DO 06-08.
Section 1. Coverage
In addition to the Ports covered by CMO 16-08 on the pilot implementation of the
Fuel Marking Program, this Order shall also cover ports with importations of diesel and
kerosene, whether or not duty and tax paid.
Section 2. Objectives
2.1 To properly identify and track kerosene and diesel entered into the
Philippines without payment of duties and taxes, whether the same are
legitimately entered free and/or exempt from duties and taxes, or illegally
entered into the Philippines;
2.2 To plug the leakage of duties and taxes due on kerosene and diesel
initially entered into the country without payment of duties and taxes and
which are eventually diverted to the domestic market, or for other use
which will subject the kerosene and diesel to duties and taxes; and
2.3 To provide the necessary tools and evidence required for the prosecution
of parties who do not pay the proper duties and taxes for kerosene and
diesel introduced into the domestic market.
Section 3. Administrative Provisions
3.1 The following shall be marked with the official marking agent designated
by the Department of finance in accordance with existing rules:
3.1.1 All kerosene, including dual purpose kerosene (DPK), subject to
zero excise tax; and
3.1.2 All diesel oil entered duty and tax free.
3.2 Responsibility for the Marking of Kerosene and Diesel and its Cost
3.2.1 In case of Kerosene subject to zero excise tax referred to in
subsection 3.1.1, the person, entity or taxpayer who owns or enters
the product or to whom it is consigned, or whoever brings the same
into the country, shall cause the marking of said duty and/or tax
free kerosene/diesel with the official marking agent, and shall bear
the cost of marking the same.
3.2.2 In case of diesel referred to in subsection 3.1.2, the person, entity
or taxpayer who imports, manufactures and/or refines said diesel
shall cause the marking thereof with the official marking agent and
shall bear the cost of marking the same.
3.3 Refusal of Person/Entity Responsible to cause Marking –
3.3.1 The failure or refusal of the person, entity or taxpayer responsible for
the marking of kerosene and diesel oil as herein required to cause the
marking within a period of fifteen (15) days from due notice shall
subject such owner, consignee or importer and the articles to such
sanctions as may be imposed in accordance with the Tariff and
Customs Code of the Philippines, as amended and other relevant
existing laws, and rules and regulations issued pursuant to law.
3.4 Presumption of illegal Importation/Withdrawal
3.4.1 In the event that diesel oil containing the official marker signifying
exemption is found in the domestic market or in the possession
of anyone or under any situation where said diesel oil is subject
to duties and taxes, it shall constitute prima facie evidence that
the same was imported or withdrawn with the intention to evade
the payment of duties and taxes due thereon and enough to
establish the existence of probable cause for the institution of
seizure and forfeiture proceedings under the Tariff and Customs
Code of the Philippines, as amended, and other related laws,
rules and regulations.
3.4.2 The same presumption shall apply in the event that kerosene subject
to zero excise tax containing the official marker is found being used,
transported, stored or otherwise labelled as aviation fuel in the
domestic markets or in possession of anyone or under any situation
where said kerosene is subject to duties and taxes.
3.5 Implementation Roll Out
3.5.1 The mandatory marking prescribed in this Order shall be
implemented at the Subic Bay Free Port and the Clark Special
Economic Zone for diesel and kerosene and at the Port of
Batangas for imported kerosene.
3.5.2 The District Collectors of ports already included in the implementation
of the marking program shall submit monthly a list of diesel and
kerosene shipments with the following particulars below:
I. Arrivals/Admissions
- Bill of lading number
- Vessel and registry number
- Date of arrival
- Consignee
- Volume in liters per bl
- Volume in liters per survey report @air (if available)
- SBMA Permit to Bring Out and CDC Permit to Bring In
(for pipeline transfers to port of Clark)
II. Duty/Tax Paid Deliveries
- Entry Number
- Date filed
- BL Number
- Vessel and registry number
- Volume in liters
- Local buyers if different from importers
III. Exempt and Free Deliveries
- Clearance Document Number
- Date filed
- BL Number
- Vessel and Registry Number
- Volume in liters
- Local buyers if different from importers
In the case of pipeline transfers of diesel from the Port of Subic to
the Port of Clark, the report to be submitted must also include the volume
of diesel obtained resulting from the “interphase” of diesel and aviation
fuel in the pipeline.
The mandatory submission of the monthly report must be received at
th
the Office of the Deputy Commissioner for intelligence on or before the 10
of the following month for consolidation and transmittal to the PIO.
3.5.3 Report of Districts Not Yet included in the Implementation
District Collectors of ports not yet included in the marking program
but with diesel and kerosene arrivals must submit reports following
the structure in 3.5.2 above. The initial report to be submitted shall
cover the whole year of 2009 and must be received at the Office of
the Deputy Commissioner for intelligence on or before 15 February
2010. Subsequent submissions must be on a monthly basis and
only when there is/are such arrival/s for the month.
3.6 Program Implementation Office (PIO)
3.6.1 The PIO established and empowered under Department Order No.
23-07, shall have the following duties and responsibilities:
3.6.1.1 Commence the implementation at the Subic Bay Free
Port, Clark Special Economic Zone, Port of Batangas
and other Ports with tax and duty free importations of
diesel or with importations of kerosene, whether duty
and tax paid or not upon effectivity of this order;
3.6.1.2 Ensure that all operational and technical written
instructions are in place and properly disseminated
to all concerned;
3.6.1.3 Identify and resolve any operational and technical
difficulties encountered during the regular
implementation and propose measures to enhance
the effectivity of the Program.
3.6.1.4 Submit monthly progress report to the Secretary of
Finance on the Pilot Implementation.
Section 4. Operational Provisions
4.1 Notice of Arrival – For kerosene shipments, the importers or their
authorized agents shall submit at least three (3) days prior to the arrival of
the carrying vessel a Notice of Arrival to the customs authorities, copy
furnished the designated marking service provider. The Notice shall
contain the following data: ETA, Vessel Name, Pier/Port of Destination,
and the Quantity of Product (in volume liters)
4.2 Notification of Purchase. Buyers from suppliers in freeports and other
similar sources of duty/tax free or exempt diesel (PEZA and other ecozone
locators, bunkering entities as well as gasoline stations operating in
freeports/special ecozones) shall file with the designated marking service
provider at least seven (7) working days from the expected date of
marking a Notification of Purchase Tax and Duty Free Diesel using the
amended form (“Annex A”). The notification shall be directed to the
supplier who shall be responsible for coordinating with the marking service
provider and the Bureau of Customs Office in scheduling the date of the
marking for the diesel being purchased.
Prior to the filing of the Notification of Purchase with the designated
service provider, copies thereof shall be given to the Customs Collector
concerned, the authorized representative of the Deputy Commissioner for
intelligence and the SBMA Office concerned who shall acknowledge
receipt thereof in the original copy of the notification which will be given to
the service provider.
4.3 Instructions to Mark and Required Coordination. The concerned Customs
Office, prior to processing the Customs declaration filed for the clearance
and release of the diesel shall verify if the Notice to Purchase required in
4.2 has been provided. The Customs declaration
(entry/transit/transshipment) shall then be clearly marked/stamped with
the words “SUBJECT TO MARKING PURSUANT TO DEPARTMENT
ORDER 23-07 as amended”. The same Customs office shall have
responsibility for notifying Customs Gatekeepers of any releases for which
marking is required in order that they can effectively discharge their
responsibilities described in 4.4.3.
The Customs Office concerned shall utilize risk assessment techniques in
deciding whether or not to be actually present during the marking taking
into account available manpower and the need to insure that there will be
no delay in the marking process.
4.4 Certificate of Marking
4.4.1 The service provider, after completing the marking of the
kerosene/diesel for withdrawal, shall issue the corresponding
Certificate of Marking (COM) following the format prescribed
in Annex “B” hereof;
4.4.2 The supplier shall demand presentation of the duly accomplished
Certificate of Marking as basis for its issuance of the corresponding
Petroleum Gate Pass to authorize withdrawal of the
kerosene/diesel indicating the COM number therein; and
4.4.3 The Customs personnel assigned at the facility exit/s or Customs
Guard/Inspector in case of tankers or sea vessel, shall demand
presentation of the relevant Certificate of Marking and it satisfied of
its sufficiency and validity, shall authorize the exit/departure of the
carrying tankers (over-land or by sea) from the facility. He shall
likewise retain a copy of the Certificate of Marking presented for the
withdrawn shipment and shall indicate in the said Certificate the
date and time of the actual exit of the marked fuel shipment in the
gate/s or the port as the case may be. It shall be his responsibility
to provide the Port Reconciliation Team created hereunder with
copies of the COMs submitted to him.
4.5 Kerosene and Diesel imported free from payment of duties and taxes into
the Subic Bay Free Port and the Clark Special Economic Zone applied for
transfer to the Philippines Economic Zone Authority (PEZA) or other
ecozones must be covered by an Import Permit issued by the receiving
ecozone authority. For transfer of such petroleum products to the Joint Oil
Companies Aviation Storage Plant (JOCAS) a prior approval from the
government office with jurisdiction over the facility must be required on top
of the transshipment application.
4.6 Transfer of said PP from SBMA/CSEZ imported conditionally free from
payment of customs duties and taxes for bunkering/loading into foreign
ships, vessels or aircraft must be covered by a corresponding export
declaration together with a duty issued bunkering permit. Copies of the
sub gate pass shall be submitted to the Customs Office prior to the actual
exit of the shipment covered therein.
4.7 The current practice of allowing PP supplier to file one (1) customs
declaration for his total distribution requirements covering a period of
time or for the requirements of many customers with each partial
withdrawal covered by a sub-gate pass shall be allowed only for tax
and/or duty paid withdrawals.
4.8 Every withdrawal of petroleum products subject to marking shall be
covered by one customs declaration (import entry, export entry, or
transshipment/transit permit)
4.9 Marking of diesel and Kerosene including (DPK) initially stored in a bonded
facility at the Port of Batangas, the payment of duties and taxes of which is
suspended and then transferred under customs control by pipeline or
other means to the Pandacan Oil Terminal shall be undertaken in the
course of the withdrawal of such products from the Pandacan Terminal.
The Collection District which has jurisdiction over the Pandacan Oil
Terminal shall be responsible for the proper implementation of this order
to include the administrative arrangements for the designated marking
service provider.
4.10 Port Reconciliation Team (PRT) – All gate passes issued covering
releases without payment of duties and taxes must be subjected to post
audit by the PRT, chaired by the District Collector of Customs and with the
marking service provider and the fuel suppliers as members. The District
Collector shall designate other members to the PRT as he may deemed
needed. PRT must on the basis of available data and information
identify/ascertain the following:
(i) Releases without duties and taxes paid but have not been marked
pursuant to this order.
(ii) Diversions of free and exempt releases to the domestic market or
abuses in the availment of the privilege.
(iii) In general, that all arrivals of diesel and kerosene in the district
have been dispose of in accordance with law.
4.11 Port Implementation Team (PIT) – For the proper implementation of this
order, the District Collector shall likewise establish a PIT chaired by the
District Collector with representatives from the Freeport/Ecozone Authority
(i.e SBMA, CDC), all importers of petroleum products at the port, the port
operator, the fuel storage facility owner/operator, all suppliers and
concerned shipping lines as members.
The PIT shall inform the Secretary of Finance (Attn. Program
Implementation Office) difficulties encountered and remedies applied as
well as systems/procedures improvements.
Section 5. Disposition of Seized Marked Fuel
Pending the conduct of the seizure and forfeiture proceedings against any
marked fuel seized for being sold in the domestic market, the District Collector shall
cause the immediate disposition of the shipment pursuant to Section 2607 of the TCCP,
as amended, taking into account the objectives of the Fuel Marking Program. The
proceeds of the auction sale shall be held in trust until termination of the case.
If the seized fuel shipment remains unsold after two failed biddings, the District
Collector shall immediately report the matter to the Committee on Negotiated Sale, who
shall dispose of the same pursuant to the provisions of CAO 10-2007. In case where the
shipment remains unsold despite offers for negotiated sale by the Bureau, the same shall
be disposed through other modes of disposition authorized under the TCCP, as amended.
Section 6. Liability of Customs Personnel, Importers, Brokers, etc.
Customs Personnel, importers, brokers and other individual found violating any
provisions of this Order and CMO 16-2008 shall be dealt with accordingly pursuant to
existing laws, rules and regulations.
Section 7. Transitory Provisions
Pending the nationwide roll out of the Program, the services of the existing
nominated service provider shall be retained during the regular implementation of the
Fuel Marking Program in the ports covered by this Order.
Section 8. Repealing Clause
All orders, circulars, memoranda, and other issuances or parts thereof which are
inconsistent with this Order are hereby deemed repealed or modified accordingly.
Section 9. Effectivity
This Order shall take effect upon its publication. Upon effectivity of this Order, no
Diesel entered free or exempt from duties and taxes in whole or in part shall be
removed from their place of storage without having been marked pursuant to this Order.
No kerosene shipment arriving in any port for which the fuel marking has been
implemented shall be cleared and/or released without having been marked accordingly.
